Hong Kong stocks edge down as investors eye funding conditions

SHANGHAI, June 23 (Reuters) - Hong Kong shares were slightly down on Monday, as investors assessed the potential for tighter cash supplies and monitored tensions in the Middle East for a likely hit to sentiment. China stocks were mixed.

** China's blue-chip CSI300 Index was down 0.2% by the lunch break, while the Shanghai Composite Index gained 0.2%. Hong Kong benchmark Hang Seng was down 0.1%.

** The Hong Kong dollar slipped to 7.85 per U.S. dollar on Monday, hitting the weak end of its trading band for the second time since May 2023. The move may prompt the Hong Kong Monetary Authority to drain liquidity from the banking system to support the currency.

** Hong Kong market liquidity is unlikely to ease further and may even tighten as Hong Kong Interbank Offered Rates (HIBOR) have likely bottomed out and southbound inflows have slowed, said Kevin Liu, strategist at China International Capital Corporation (CICC).

** The overnight HIBOR, a key barometer of liquidity, hovered near a record low at 0.01777%.

** "Short-term liquidity tightening, uncertainties surrounding tariff negotiations, weakening economic data, and delays in policy support could all contribute to increased market volatility," Liu said.

** Risk sentiment was further limited as global investors waited to see if Iran would retaliate against U.S. attacks on its nuclear sites, with resulting risks to global activity and inflation.

** China's Coal Index rose 1.3%.

** Maritime shipping and port shares broadly rose, with Nangjing Port up to 10%.

** Hua Hong Semi listed in Hong Kong jumped 7%, after media reported that the U.S. government weighs additional restrictions on China, including revoking waivers that allow global chip makers to access American technology in China.

(Reporting by Shanghai Newsroom; Editing by Janane Venkatraman)